July 27, 2021 | 8:20 pm
The Ministry of Energy (Sener) declared it urgent to set maximum prices for Liquefied Petroleum gas (LP), for which it asked the Energy Regulatory Commission (CRE) to issue emergency regulations, within a period of no more than three days, according to a draft submitted to the National Commission for Regulatory Improvement (Conamer).
The document “Emergency Guideline for the well-being of the Consumer of Liquefied Petroleum Gas” argues that the well-being of Mexican families must be guaranteed through the effective protection of their right to access a basic consumption energy “that does not promote the wealth of one sector of the industry at the cost of damage to another ”.
Gas Bienestar will further distort the LP gas market
The CRE must establish a methodology that sets maximum prices for the final consumer of LP gas considering the establishment of conditions for affordable access to fuel at a cost that provides for the development of the industry and “guarantees the preservation of democracy based on economic development , social and political of the country and its inhabitants ”.
Bernardo Cortés, specialist in energy law at Dentons Lopez Velarde, said that the document has several flaws from the legal point of view, which provided for injunctions and suspensions with general effects in the event that this draft is approved.
The LP gas market is governed by a market of free competition and competition, so the Sener does not have any powers or interference to be able to regulate prices in that market, in any case it would correspond to Cofece; the Sener is clearly violating both the law and the constitution. He anticipated that it will not have a good development in federal courts.
What did Cofece say?
On July 7, the Federal Economic Competition Commission (Cofece) said that LP gas prices do not depend on a single authority but on a series of actions to push prices down.
“In terms of the applicable regulations, prices do not depend on a single regulatory authority or body, but on a series of comprehensive actions that together are aimed at generating market conditions that push prices down,” he mentioned.
He commented that in the fiscal years from 2017 to 2019, the Congress of the Union established in the Federal Revenue Law (LIF) the power of the Energy Regulatory Commission (CRE) for the provisional regulation of prices in the sale to the public LPG gas, as a precautionary measure, as long as Cofece concludes a procedure to declare conditions of competition.
However, as of fiscal year 2020, the LIF stopped making reference to this precautionary measure.
In turn, to lower prices, President Andrés Manuel López Obrador pointed out that to reduce the prices of LP Gas, he will create the Bienestar gas station that will operate in October in the main cities of the country, starting at an installation in Iztapalapa.